One of the most significant characteristics of recent years economic development is the profound growth in international production by transnational corporations (TNCs). This paper presents the results of a major survey of the involvement of Danish industry in this internationalization process. In particular, the paper focuses on Danish investments in the emerging economies of Eastern Europe and less developed countries (LDCs), an aspect of Danish foreign investment which is highly under-researched. The main findings of the paper is that around 1100 Danish companies are involved in international production, having almost 2900 subsidiaries abroad. 350 of those subsidiaries are located in the emerging economies of LDCs and Eastern Europe. The paper observes that the Danish involvement in emerging economies is significantly below that of other OECD countries, a finding which is linked to the relative dominance of small and medium sized companies in Danish industry. The paper notes that whereas the most important emerging economy destination in the seventies and eighties was Latin America and here in particular Brazil, Danish companies now prefer to invest in Asia and Eastern Europe, Poland being the by far most important emerging economy country. In general, the paper argues that small and medium sized companies play a pivotal role in the internationalization of Danish industry, less so in LDCs, more so in Eastern Europe. The survey also confirms that the Danish investment promotion agency IFU, participating in 40% of all investment projects in LDCs, plays a pivotal role in the expansion of Danish industry into LDCs. Finally, an inquiry among 167 companies with manufacturing activities in LDCs or Eastern Europe reveals that more than 50% of all investment projects in emerging economies are undertaken mainly in order to get access to the emerging economy market. Only 18% of the investment projects are motivated with the more favorable cost conditions - mainly lower salaries - offered by many emerging economies. This finding challenges the widespread belief that Danish investments in LDCs and Eastern Europe will cause a general loss of Danish jobs and productive capacity.

Filer i denne post: 1

Over the past decade, European businesses have accelerated internationalization, expanding within and beyond Europe. I argue that a major driving force behind this push towards global presence is the restructuring of corporate diversification strategies, which in turn is a result of gradual changes in industry structure and the institutional environment in home markets as well as global markets. The strategic change converts diversified conglomerates to global specialists in narrower niche markets. It brings them in direct confrontation with a small number of key competitors operating worldwide. On this stage, key competitive advantages are gained by making best use of resources across the world, and by effective global integration of operations. Hence de-diversification and internationalization are opposite sides of the same coin: globalfocusing. The argument is developed based on inductive case research of the restructuring in two Danish manufacturing enterprises, and a review of overall trends in Danish businesses. On this basis, I analyze the economic and institutional forces driving this process, and suggest propositions for empirical testing. The paper points to consequences of liberalization, and is thus of high relevance for managers and policy makers in countries that are not yet as open as Denmark.